Discuss how a politicians "policy differentiation" from his opponent in an election softens the competition over how much in political rents the politician will be able to collect.
What will be an ideal response?
Politicians in electoral competition are a bit like firms in price competition: If they seek rents (as firms seek profits), they compete on how much to charge. Without product differentiation, the Bertrand model predicts zero profits for firms -- and similar logic suggests zero political rents or politicians in elections with two candidates. But with product differentiation, the Bertrand model predicts positive profits for price-competitors -- and the same logic implies that "policy differentiations" allows political rent seeking to survive electoral competition.
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In the circular flow model, which of the following owns the factors of production?
A) only federal, state, and local governments B) only households C) only firms D) both firms and households E) firms, households, and all levels of government
The price elasticity of demand measures the
a. responsiveness of a good's price to a change in quantity demanded b. adaptability of suppliers when a change in demand alters the price of a good c. responsiveness of quantity demanded to a change in a good's price d. adaptability of buyers when there is a change in demand e. responsiveness of quantity supplied to a change in quantity demanded